Perspectives on where our world is heading from a vantage point in Denver, Colorado.

06 October 2005

Against Mail In Rebates.

If you've bought anything from CompUSA, or a number of other computer retailers lately, you've encountered it, the mail in rebate. I hate them.

Here's how it works. You buy a gadget or combination of gadgets. They are advertised in the store flyer and on the shelves at the after rebate price, with the point of sale price and "after rebate" language in smaller print. Then, you go to the cash register and pay the pre-rebate price . . . and pay sales tax on it, and get a thick stack of receipts and photocopies to take home with you.

Once you get home, you have to fill in blanks on all those receipts, attach photocopies, address envelopes, and cut out pieces of boxes with scissors (sometimes copies and sometimes the originals), and mail these bundles to several addresses all over the country where they are processed and, several months later, if you did everything right, they send you a series of small checks -- your rebates, in what looks like junk mail.

While they will usually notify you that your rebate request has been received by e-mail, you must use paper, pen and snail mail to transmit physical documents to have your rebate requests processed, by companies that are in the business of making the world wireless and paperless, in order to get your money, in months, in an industry designed to make commerce move at the speed of light. Needless to say, it shows contempt for the customer.

Of course, that contempt is justified. Why do computer product companies run us through this mindless and worthless paperwork? Because, many people don't do all that paperwork in the ten to sixty days or so (different for every company) that the rebate form requires, or fail to complete the paperwork properly, or throw the rebate checks in the trash thinking that they are junk mail. Hell, I'm a lawyer, and I have on one ocassion or another in my life done all of these things. Thus, they do it because a significant proportion of their customers will buy expecting to pay a lower price and end up instead paying a higher price. Fundamentally, it is a deceptive trade practice, that imposes additional and unnecessary sales tax, ties up your credit during the float period while claims are processed, requires postage, and is an annoying hassle, for diligent customers, and simply cheats less diligent ones. The process itself is nothing but a dead weight loss incurred for useless activity from an economic point of view. (And, for those libertarians out there, I would note that this waste is produced entirely by private enterprise without any help from the government).

Prices would be somewhat higher for diligent customers, and somewhat lower for less diligent ones, if companies simply lowered prices at the cash register. But, it isn't as if we would pay the pre-rebate prices. The same competition that drives companies to offer rebates would drive other kinds of sales if rebates weren't used. I think most consumers would be willing to pay a little more to do business in a fraud free, hassle free environment. But, apparently the folks in marketing disagree.

I would like to think that the majority of the buying public would like to do away with rebates entirely (why don't products sell for the after rebate price in the first place?).Any ideas on how to start a campaign to rid the country of rebates?